Do election rules cause ideological heterogeneity in parties in legislatures? We examine variation in electoral systems in the United States, specifically the presence of two-round runoff elections used in some states but not others. We find that top-two runoff elections cause greater ideological diversity in political parties in legislatures in U.S. states. We argue this is because same-party competition can occur in both the first and second rounds of the elections. In these runoff states, in contrast to those with closed primary rules, party caucuses will have greater ideological diversity as some candidates will face primary reelection incentives to move to the extreme. We test this using a synthetic control model, comparing multiple US state legislatures with different electoral system rules. We find causal evidence that the top-two runoff primary electoral system has increased ideological diversity in both the majority and minority party caucuses in legislative chambers. This effect persists for Democratic party caucuses after adoption of this new electoral system, but this effect for Republican party caucuses is only for a few time periods before it reverts back to pre-treatment lower ideological heterogeneity. Implications for the role electoral systems play in creating instability via heterogeneity in legislative parties are discussed.